By Nicolas Abington | Crescent City Capital Market Analyst Intern
As of last Wednesday, we had an all-time high in the S&P 500 after reports claiming the coronavirus was being taken care and there was nothing to worry about. Since then there have been outbreaks of the virus all over the world with confirmed cases in Italy, Iran, and the US. The response has also been filled with worrisome news as the CDC is severely underfunded to take on the burden and the perplexing move by the Trump administration to have Mike Pence lead the operations of the outbreak in the US.
The world is beginning to fear a new plague is underway and with that are beginning to horde their money for supplies. As a result, almost every part of the financial sector has taken substantial losses. The S&P 500 has decreased by almost 8% since last Wednesday’s high, along with gold and silver taking liquidation losses. Even cryptocurrency has been put into a consolidation phase with BTCUSD going from $10,104 to $8,619 at the time of writing.
In past articles, there has been a heavy indication for the inverse correlation between stocks and cryptocurrency but this past week has acted otherwise. The reason for this is because these massive sell-offs aren’t being triggered by any fundamental change in the asset classes themselves. They are instead being fueled by the idea of what could happen to these assets if the coronavirus pans out to be a doomsday level threat on the world economy. These sell-offs are emotionally based and shouldn’t be taken as a trend reversal in cryptocurrency but rather as buying opportunities.